2 weeks ago
Small car demand surges in India after three-year gap
For a few years, not many people in India were buying small cars.
Now, after three years, people want them again.
In just four months, sales of small cars more than doubled.
The most popular small cars are made by Maruti Suzuki and Renault.
A big reason for this change is a new tax rule that made cars cheaper.
The leader of Maruti Suzuki says this helped their sales grow a lot.
Small cars are often the first car a family buys.
They are important because they help many families get around safely.
The company thinks even more people will buy small cars in the future.
This is good news for car makers and for families who want a car.
Entry-level car sales more than doubled to 58,109 units in April-July FY 2026-27 from 28,193 units a year earlier.
Growth was driven by Maruti Suzuki's Alto and S-Presso and Renault's Kwid.
Maruti Suzuki's Alto and S-Presso contributed 56,391 units, up 114% year-on-year, while Renault Kwid sales fell 7%.
MSIL Chairman RC Bhargava credited GST rate changes on September 22, 2025 for the revival.
MSIL estimates the car industry could grow to 6.1-6.3 million units by FY2030-31 with small cars growing faster.
- Who
- Maruti Suzuki India (MSIL), Renault, and Indian car buyers
- What
- Demand for small cars surged, with entry-level sales more than doubling
- Where
- India
- When
- April-July FY 2026-27, reported August 16, 2026
- Why
- GST rate changes and growing inflation and fuel prices boosted demand for affordable small cars
Optimistic View
Cautious View
Small car revival sustainability
Optimistic View
GST reforms and flexible production lines will sustain strong small car growth, with the segment growing faster than the last five years.
Cautious View
Renault Kwid sales declined 7% y-o-y, and the segment still faces challenges from past capacity adjustments and competition from SUVs.
Key facts
- Entry-level sales (Apr-Jul FY26-27)
- 58,109 units
- Entry-level sales (Apr-Jul FY25-26)
- 28,193 units
- Alto and S-Presso sales
- 56,391 units, up 114% y-o-y
- Renault Kwid sales
- 1,718 units, down 7% y-o-y
- Mini segment sales FY2025-26
- 1,17,584 units, down ~12% y-o-y
- GST rate change date
- September 22, 2025
- MSIL Q1 sales growth
- 38% (industry 28%)
- Projected car industry size by FY2030-31
- 6.1-6.3 million units
Quotes
Hisashi Takeuchi
Managing Director and CEO, Maruti Suzuki India
“Small cars have historically democratised mobility in India and have served as the first step into car ownership for millions of families. Their recovery is important not only for the automobile industry, but also for expanding access to safer and more comfortable mobility across society.”
thehindubusinessline.com
“The sales of small cars grew 17 per cent in the second half of last year but grew 35 per cent in quarter one (Q1) this year as more cars required by customers could be produced.”
thehindubusinessline.com








